Paul Craig Roberts 320

Nomi Prins Fills Us In On Another Of The President’s Bankers

“Treasury Secretary Steven Mnuchin is a man who has a real sense of the opportunity that’s embedded in this moment — for the large banks and their CEOs to make a bundle of money — but no appropriate sense of the risks involved or fear for a future in which he and his president might find themselves bailing out such banks, 2008-style.” — Nomi Prins

As the author of the last justifiable tax rate reduction, the supply-side cure for stagflation in 1981, I can say that there is no need whatsoever for the Mnuchin tax cut. Mnuchin’s claim that an expected tax cut is baked into high equity prices and that the stock market will collapse without a tax cut is false. The stock market is high because of the extraordinary liquidity provided by the US, EU, UK, and Japaese central banks. It is this liquidity that has driven up stock and bond prices.

Nomi Prins correctly reports that the so-called “Tax Cuts and Job Act” contains “new blows to middle-class wellbeing, including the elimination of deductions for medical expenses, student loan interest, and state and local taxes. For corporations, already flush with cash, the plan calls for a significant, not to say staggering, tax break. Their tax rate would be slashed from 35% to 20%.”

As Nomi Prins puts it: “Welcome to the twenty-first-century American politics of the .01%.”

The Republican claims that the lower tax on corporations would bring back money held offshore is likely false as global corporations invest offshore where labor and environmental costs are lower. Moreover, why give up even a fifth of the profits when the corporations can use the money to buy up politicians and companies abroad?